Online Ad Networks in Despair

Some ad networks are late with payments and slashing rates. There have been many reports of internet ad networks dying recently, and most of them deserve to because they add no value...they are all hat no cattle.

Publishing Based Business Models in Decline

Like the death of ad networks, many publishing based business models are in decline.

The yellow page companies that were worth billions are facing bankruptcy.

An encyclopedia that costs $3,000 is covering the field of SEO, but with the speed of information online there is going to be a cap on how accurate and deep a generalist volume can be. The same is true for most web publishing business models.

Most content is a commodity, and it is hard to build a loyal PROFITABLE audience if you are in a generic vertical like news. The New York Times is running on fumes.

Almost all of the popular blogs today are commercial ventures with teams of writers, aggressive ad-sales operations, bloated sites, and strategies of self-linking. Some are good, some are boring, but to argue that they're part of a "blogosphere" that is distinguishable from the "mainstream media" seems more and more like an act of nostalgia, if not self-delusion.

“Historically, the domain services businesses. . . . have generated the majority of their gross profit from intermediating advertising revenue. As the advertising component of the industry has declined, industry profitability plummeted. Many service businesses that rely exclusively on advertising are no longer viable and the industry is ripe for consolidation.
Going forward the company sees secondary market domain name sales becoming a much more significant component of the industry . . .”

P&G's Ted McConnell pointed to the drumbeat of complaints about social networks being unable to monetize their sites.
"I have a reaction to that as a consumer advocate and an advertiser," he said. "What in heaven's name made you think you could monetize the real estate in which somebody is breaking up with their girlfriend?"

Give it Away

Rather than accumulating debt to spend on marketing try to create something that is free that you can give away. Sell food? Offer free recipes and a free online cookbook. Sell software? Give away a lite version. Looking to build a platform? Offer a strong API. Sell consulting or information? Offer with papers and/or a blog. As you gain exposure you can give away less and spend more time and effort making your customer relationship deeper and more meaningful.

Aaron it might be a bit too broad a stroke to say the increase in domain aftermarket liquidity is due to domainers being forced to sell their portfolios.

Yes, many weaker portfolio holders are being forced to sell, but often not due to advertising revenue declines but the overall decline in available pocket money. The increase in "domaining" led to large numbers of renewals this year for speculative domainers, and those lesser domain investments are not as promising as once thought. Domainers have different business models; some relied on growth of speculative domaining, some hoped to develop, some had grand plans to "own the English language". Late in 2007 there was a general push to increased liquidity in the domain aftermarket, as a means of increasing the life of the domaining industry, separate from the advertising downturn.

True some are choosing to get out because ad revenues are inadequate, but there are many other forces at work right now in the domain industry.

If you study our economics based on fiat currency and fractional reserve lending you would see that most money comes into existence as debt via loans.

When a lot of people go bankrupt and a lot of homes foreclose and a lot of derivative trading instruments lose value then a lot of the money (that came into existence as a loan of some sort) disappears.

Worse yet, many banks had a lot of toxic assets on their books and decided to slow down outbound lending AND increase lending standards. Plus they were less willing to loan money to each other and TED spreads shot through the roof. One of U2's songs says "It's no secret that a liar won't believe in anyone else." :)

The central governments have made up for this credit tightening by bailing out tons of banks and running the currency printing drives in overdrive. More currency would typically cause massive inflation, but we are now entering a deflationary period because so much wealth was destroyed and so much of the past decade's growth was based on mortgage fraud.

Actually I have lost some money due to the recent stock market crash, and am looking for ways to comfort myself and therefore looking for some answers, explanations or excuses as to why, what etc. etc..

But sure, I am not alone and if I compare what I have lost with what these guys have – I feel very lucky:

"During the downturn the best voices will keep building relationships, mindshares, and marketshare - even if it is not that profitable. Once the market returns they will grow faster than those who cut spending."
I totally agree with this - I think it has become insanely easy to game the system, and I PRAY that those that have taken the easy road will soon fall off the map. But the thing about this point that rings even louder to me, is to do things that put value first - even before profitability. This is one of my hardest sells - to convince a business that SEO is a long-haul effort, and those who stick to their guns and create solid content will win, every time. They tend to want immediate gains (like PPC) and sometimes don't grasp that SEO happens constantly, and will continue long after you stop paying for AdWords.
Great stuff Aaron.

Another great post and thank you for posting that Seth Godin vid. I've read a number of his books and it was great to see him talking as enthusiastically about the topics he covers as when he writes about them.

Given me a nice burst of energy (ready for the weekend!) to change parts of our business to be fantastic rather than just what they should be.

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